Today we're going to take a look at the well-established Compagnie de Saint-Gobain S.A. (EPA:SGO). The company's stock saw significant share price movement during recent months on the ENXTPA, rising to highs of €38.73 and falling to the lows of €34.19. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Compagnie de Saint-Gobain's current trading price of €35.62 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Compagnie de Saint-Gobain’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Compagnie de Saint-Gobain
Is Compagnie de Saint-Gobain still cheap?
The stock seems fairly valued at the moment according to my valuation model. It’s trading around 8.9% below my intrinsic value, which means if you buy Compagnie de Saint-Gobain today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €39.09, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Compagnie de Saint-Gobain’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Compagnie de Saint-Gobain generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Compagnie de Saint-Gobain, it is expected to deliver a relatively unexciting top-line growth of 2.9% in the next few years, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for the company, at least in the near term.
What this means for you:
Are you a shareholder? It seems like the market has already priced in SGO’s future outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you’ve been keeping tabs on SGO, now may not be the most optimal time to buy, given it is trading around its fair value. However, the positive outlook means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Compagnie de Saint-Gobain. You can find everything you need to know about Compagnie de Saint-Gobain in the latest infographic research report. If you are no longer interested in Compagnie de Saint-Gobain, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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